Nifty In Technical Charts: Stay Bullish And Buy The Dips

Finally, the market has achieved a new high print. Took 14 months. That is a lot of huffing and puffing, I guess. But the main point has been that we have remained steadfastly bullish through the past many weeks, looking for higher levels. We have been justly rewarded. Given the current positioning, the market appears poised for further gains. This positive sentiment is strongly supported by the strong Q2 GDP print, which is expected to provide continued triggers for the upward movement. Chart 1 shows most recent pitchfork set up, indicating more room to the upside.

Banks fared well, with Bank Nifty powering to a new high ahead of Nifty. Surprisingly, the major heavyweights—HDFC Bank and ICICI Bank—are still dragging their feet. Both have very minimal gains to show on a one month and three-month basis. The best performance came in from Federal Bank (up 34% in three months and 10% in a month) while Axis Bank churned out a 21% gain in three months. Bandhan Bank was the continued worst performer in the space, disappointing all its bullish suitors. PSU banks met with profit-taking after an impressive run of past several weeks. Moving forward, the index may now be powered higher by improvements in the "big names" within the private sector bank space. This area—the performance of major private banks—is crucial to monitor in the coming week and the period ahead. As illustrated in the corresponding chart, the Bank Nifty appears to have plenty of room to the upside should it choose to resume its upward trajectory.

The market continues to display a discordant breadth, a pattern previously noted, where certain charts showed bearish setups contrasting with the bullish momentum of the Nifty. Examining this further, we observe that while the Nifty 50 and MIDCAP 100 indices have successfully registered new All-Time Highs (ATHs) in 2025, the remaining indices have shown varying degrees of inertia. Specifically, the NIFTY NEXT 50 remains 9.5% below its 2024 high, and the NIFTY ALPHA index—ironically failing to deliver expected "alpha"—has over 12% to recover to reach its previous peak. The SMCAP 100 and MICROCAP indices are also trailing, approximately 6% short of their respective highs. This underperformance in the alpha-generating space raises a critical question regarding the strategies and future direction of many Portfolio Management Schemes (PMSs). For Retail and HNI investors, patience is paramount; the core investment philosophy of "time in the market, not timing the market" is being strongly tested, with the hope centered on a significant catch-up and outperformance in 2026.

If one digs deeper into the indices and their components, we may well find a US-style situation here as well — very few stocks at all time highs among the index constituents.

So, the question mark regarding breadth remains open and is a disturbing one.

I had postulated last week that, perhaps, the move out of the second and third tier stocks may be owing to a shift to gold and silver. At the end of the week, silver suddenly stole a march on gold, powering to a new swing high on reports that Chinese vaults are nearing emptying! See Chart 3. Since this one is a bigger speculative counter, we may not see so much of money move into silver (as compared to gold) but I do expect silver to continue to hog the headlines in the week ahead. The chart shows signals of a fresh uptrend re-emerging after recent consolidations, and should head for $58.5 an ounce and if beyond that, to $64-65 as well. Any price dips back toward $53 should be viewed as buying opportunities.

Coming back to equity markets, there is one sectoral index that is looking spiffy at the end of last week — Nifty Healthcare. See chart. It is on the verge of an upside breakout. Aurobindo Pharma and Laurus Labs are the outperformers within this space, with 19.5% return across three months. The latter wins the race because is just 0.2% away from an all-time high, whereas Aurobindo Pharma still remains about 9% shy of it. Not all stocks in the sectoral index are in good form though, with stocks like Cipla, Mankind and Zydus having posted negative returns over one- and three-month periods. Selective plays in this area should pay dividends.

One of the big movers of the index is always Reliance Industries Ltd. But it has been more sluggish than trended for the past many months. If one reads the news now, they seem to be eager to open up new frontiers. They just announced plans to build a $11-billion data center in Andhra Pradesh — the investment will last five years and is a collaboration between Reliance, Canada-based Brookfield, and US-based Digital Realty. The capacity is going to be 1GW. Just to clarify, 1 GW can power 6-8 million Indian homes. So, you can understand how large the project is going to be! With this investment, Reliance positions itself to compete with global tech leaders like Google and Anthropic.

This strategic foray is expected to trigger a significant re-rating of the stock. Technical indicators, as shown in the chart below, suggest that RIL is quickly approaching new highs, and a decisive move by this heavyweight would significantly bolster the case for a sustained upward trend in the Nifty 50 index.

CK Narayan is an expert in technical analysis, the founder of Growth Avenues, Chartadvise, and NeoTrader, and the chief investment officer of Plus Delta Portfolios.

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